My student loan story: How I paid it off in a year

Today I pulled out a file in my cabinet that’s been gathering dust since 2007: STUDENT LOAN. In 2007, I paid that sucker off, and I haven’t looked back since. Well, except to check my credit report. I wanted to make sure the nightmare was really over, after all.

It wasn’t too much of a nightmare, really. With interest, I owed a little over $12,000. But when you’re making $10 an hour and dreaming of moving out of your parents’ house, it sure seems like a nightmare.

I graduated in December 2005 and received my “Hey, we’re about to start charging you interest” letter five months later. I soon became hell-bent on getting out of debt. At the time, I carried a small credit card debt that originated from a pair of Doc Martens I bought in high school and never wore. It started off as $100 and then quickly spiraled into $900 partially because I only ever paid the minimum amount. I was young, dumb and hid this from my parents, who would’ve been pissed. They’re probably pissed now.

Shortly after graduating, I got my first “real” job. I was salaried, I had health benefits, and I was making more money than I ever had. I got an apartment and was excited to pay off that $900. But the student loan would be kicking in soon. My dad was reading Dave Ramsey at the time, and he was insistent that I pay off my debt. Between this and the horror stories I’d hear of people’s student loan drama, I was encouraged that mine wasn’t an overwhelming amount — I could pay it off soon, I thought. Way sooner than the 20 years they’d determined on my repayment schedule.

Paying off student loan debt early isn’t for everyone. But I had a private loan that I shouldn’t have taken out in the first place. It carried a variable 8 percent interest rate, and at the time, I had no desire to try to out-earn my student loan interest by investing. Most importantly, I just wanted this debt out of my life. So here’s what I did.

(Note: I’ve read that paying off your loan early can have a negative impact on your credit report. For me, this wasn’t the case, but I thought it was worth mentioning.)

I avoided lifestyle inflation

Remember a while back when I wrote about a friend who did fancy things that I couldn’t afford to do? Well, I suppose I could have afforded to go to St. Maarten with her if I wasn’t focused on paying off my student loan early. When I started working, I gave myself a small cushion for entertainment, yeah — but most of my income was aimed at my debt.

While I technically could have taken a trip or lived in a better apartment or worn better clothes, not having any debt was more important than any kind of lifestyle improvement at that time. Despite my lender neatly calculating my monthly amount, I didn’t see my debt as a monthly bill — I saw it as one large amount, and as long as that amount was there, my income would be dedicated to it.

Thus, I couldn’t conceive of trying to go on a tropical vacation when I owed thousands of dollars. When I did conceive of it, my mom quickly squelched the idea. “You’re 23,” she would tell me. “You have plenty of time to travel.” Had I been older and in debt, maybe I would have decided to travel — life is short, after all — but at that time, I was young enough to have more youth to look forward to. So I decided sacrificing a year to pay off my debts and live like a pauper wouldn’t hurt.

It was worth it. A year after paying off my student loan, I took a two-week trip to Europe, where I didn’t once think to myself, “Ugh, I’m eating pizza by the Coliseum but I’m in soooo much debt.” It was a completely guilt-free trip.

I didn’t have “mad” money

If I came into a small amount of money for whatever reason — a bonus, credit card reward — I never thought of it as my “mad money.” I had a strict amount allocated for entertainment, and if I came into something extra, it didn’t go toward more entertainment. It went toward my student loan.

OK, most of the time I did this. I admit, there were times that I’d get a little something extra and use it for a want instead of a need. But I always ended up feeling guilty about it, although maybe I shouldn’t have, because you should leave room in life for fun, right?

But again, the idea was to work at my debt wholeheartedly so that I could be completely free in a short amount of time. I didn’t want to sacrifice a little for 10 years or even five years. I wanted to sacrifice a lot for one year. (Although, at the time, I didn’t even know one year was possible — I just wanted to pay it off ASAP.) I wanted to take advantage of the fact that my debt amount was modest, and paying it off this quickly was doable. This might sound contradictory to a couple of GRS tenets, specifically: “It’s more important to be happy than it is to be rich,” and “Slow and steady wins the race.” So let me clarify. I wasn’t obsessed with money; I was obsessed with freedom. I wasn’t in a race to get rich — I just wanted to be able to live closer to my means without looming debt. So for that year, anything extra would (usually) go toward my debt, and if it didn’t, I’d be a little peeved at myself.

I paid attention to the details

Back then, I spent a lot of time on the phone with my lender. I’d pay a huge chunk of my loan, and instead of applying it to the principal, they’d apply it to future interest — and the interest amount was predetermined to be for a 20-year period. That’s a hell of a lot, so periodically, I’d have to call and shorten my repayment term. I also had to let them know any extra money I was paying was to go to the principal. Each month, I calculated the amounts they would come up with to make sure they were right. If they weren’t, I called. As the balance decreased, I became more and more encouraged.

I moved back in

And finally, the ultimate sacrifice. It was the beginning of 2007, and I think I had something like $6,000 left on my loan. I was determined to pay it off by the year’s end. Around that time, I got a new job that paid double what I was making, so this was especially encouraging. “I could pay this off by July!” I thought. But then I realized that if I moved back in with my parents, I could turbo-boost my debt repayment and pay it off even sooner. Luckily, my parents didn’t charge me rent. That was great. What wasn’t so great, however, was how strict they were. I was 24 years old and I had to be home by midnight. If I wanted to go see my friend’s band play in the hip part of town where I used to live, my mom didn’t care. They’d better be onstage by 10.

We fought a lot, my mom and I. “Even when you’re 30,” she would yell, “I’m going to be checking up on you!”

She was right. Last weekend, I went to a party that was a couple of hours away, and my mom made me call her when I got there. Back then, I felt like moving back home was my biggest sacrifice. Now, I live 3,000 miles away, and when I miss my parents, I think about the times that I stayed home on a Friday night so we could watch TV and laugh together.

At any rate, saving an extra $700 a month allowed me to pay off my loan just a few months later. By early 2007, a year after my student loan repayments began, I was officially out of debt.

Ultimately, I have my parents to thank for my financial freedom. My dad’s insistence and my mom’s frugality intimidated me into wanting to get out of debt. Later, those qualities encouraged me to save money to pursue my goals. It’s funny, moving to another state to chase a dream was the last thing my parents wanted me to do, but their advice helped me do it.

That year, including moving back in with them, was rough. But the sacrifice was so worthwhile.

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Sometimes I feel I will never be out of debt. I graduated with over $60k of debt. Today, my debt as it stands (not including mortgage) is about 8.5k after 5 years. Seems great right? Well, I married a woman (who I love and is amazing!) who is a few years younger than I and understandably in more debt. So our total debt as it stands is 26.5k. Just feel like giving up sometimes.

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Rob

My student loans are on the income based system due to my low pay job I will be on it for 10 years and it will go away then again at 85k I would never get away from that amount without that program

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Joanne Danganan

This is great! It’s great that you had the choice to move back home! I personally don’t have the choice and it would save me at least $600 per month that could go toward my debt, but I’m getting by 🙂

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Nightvid Cole

Can you move close to work and ditch the car? If you are willing, you can pay off your debt just as fast as you could if you lived at home…

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Mila

May I ask, did you take out a federal loan? Or a private loan? If it is a private one, would you mind telling me which bank you took out from?
I am choosing which bank to take loan but still, I can’t decide yet 🙁

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Kayla

Great job — I wish I could do this, but I’m doing the best I can. Unfortunately for me, I’m in so much debt that it’s going to take years for me, so I need to balance things out over the long-term. I’m trying to live a sustainable life that also pays down debt quickly though — these posts are always an inspiration!

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Nightvid Cole

There are two super-cheap places to live for many. One being at home, the other being close enough to work that you can ditch the car.

You can drive to work from home and save $600 a month on rent, or you can move close to work and save $600 a month on car expenses.

Unless you are lucky enough your parents live walking distance to your job. Then you can live on almost nothing…

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The Dude

I accepted long ago that I would never be out of debt and so the title of this article gave me hope. False hope.
I thought, “Oh, I have to read this. Maybe my life isn’t ruined by over $100K in educational debt and low wage jobs!”

Wrong. Just a rehashing of stuff I’ve heard a million times, with the patronizing tone that “Since I did it, so can you!” No, really. $12,000 would be a dream amount. I, however, am still screwed and feel like a man sun-beat in the desert, dying of thirst. You are the person who came out of nowhere carrying a water jug, galloping on your horse through the sand to bring me water. You toss it to me and I open the jug, happier than a kid on Christmas morning, only to realize that it’s a jug of sand.
I’m sorry, I don’t mean to sound bitter and envious, but I am. Good for you that you paid them off. I am genuinely happy for you. Just please be more careful about how you title articles. I feel horrible now.

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monica

ok guys. this is a complete no brainer. moving in with your parents and dedicating most of your paycheck towards a 12000 loan would not take long at all. try 30000 with a myriad of small credit cards, a car payment (because who doesn’t buy a car when they get “real” paychecks unless mommy and daddy paid for one at an earlier, spoon-fed time). guess what. most people don’t have the option to move in with their parents and most people do not have such little debt to be paid off.

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Roy

Hi All. I’m looking for a few opinions on if we should 1. pay off all of our student loan now, 2. continue to make the minimum payments, or 3. a combination of both.

The numbers:

Age: Her 36, Me 40

Student Loan: 62K @ 7%

Other Debt: 0 (besides rent and monthly expenses)

Cash: 50K

Retirement: 96K

Income: wife 3.3K/mo, me 8K–16K/mo (freelance, so this number varies, but it’s been a great year so far)

I’m sure there’s a lot of missing info, but any opinions would be appreciated.

Thanks!

-Roy

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The Dude

Why would you not pay it off immediately if you can? The longer you wait, the more you have to pay.

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Jennifer Allen, TX

maybe this works for SOME people but not for me.

– out of work since graduation 7/2007 and no job or permamnent employment. Due to EConomic crisis.

Please don’t tell me this is my fault. As I continue to look for a job and longevity to pay my loans.

not all of us are given acceptable work promised paychecks.

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Almost There

So, I enjoyed reading a lot of the replies on here though I did not read them all. I’m glad that people are taking their debt more seriously. I wish I did a lot earlier in my life.

I thought I’d share my experiences and future plans in hopes it may help motivate someone or maybe correct my path if someone sees a problem.

I’m an ’85 HS grad. Joined the Marines the following year. I got out in ’92 with no saving and only 12k GI bill so I went to school in ’93 (26yo). While in school I still didn’t save money and I racked up $10k in CC debt. When I got my degree in ’96 I used up all my 12k GI bill and racked up 40k in student loans and still had my 10k in CC debt. I decided to focus on paying off debt.

I got my first job after college in ’96 (29yo) and started putting 10% of my salary towards retirement (only made 34k). I could put more but I didn’t because I wanted wiggle room with funds. Turns out later in life, I never needed it. I had plenty of fun and plenty of spare income I could have used to pay debt off.

By 2000(34yo) I had paid off my CC debt but my school loan was still about 37k. I didn’t do much to knocking it down opting for a 30yr plan. I bought a house in 2000 so now I had a mortgage.

Though it does hurt my credit rating a little, I have not used my CCs since I paid them off. Started living within my means and the money I had. BTW my mother had insisted I put away $100 a month since ’86 and I never did it. I which I had listened to her because that would have been a good chunk of money by now.

By the time ’08 rolled around and the crash occurred, I was 41yo, my investments of 150k had dropped to 58k, I still owed in the 30+k range in student loans and I started to get worried about retirement. I upped my investment contributions to the max, but still did nothing for my student loans since it had a lower interest rate than what I could make in the market. I could have paid my student loans off in the 90s is the reality but I was nervous taking that much out of my monthly spare income.

Here I am now at 46yo, my investments bounced back to $370k I still owe $20k in student loans, I still owe $128 on my house. The kicker is I only have about 20yrs to save. I’ve made a recent decision to finally free myself from the student loan and here’s how I came about with that decision. If I pay my $223 for the next 240 months I would have paid out about 53k for a 20k balance (30k in interest). If I paid it off and put that extra $223 into an investment which hopefully makes about 7% until 66 it would turn into about $117k. That was a no brainer. Which would you rather do at 66, pay out 30k or collect 117k? I wish I would have paid my loan off earlier. I don’t even want to know how much I wasted on interest.

Moral of the story:
1. Pay your loans off early because you have plenty of time to enjoy life. I wish I did. I am 46 and feel like I’m 20!
2. Don’t look at your debt in a monthly payment sense, look at it from a perspective of what you would end up paying for that debt.
3. It’s never too late to start saving for retirement… take it seriously! I started at 29 and really only cranked it up only in my early 40s. Max out your 401k and Roth if you can.

No I didn’t have children but I had GFs the entire time. I managed to still travel with them, help with their kids and grand kids. Now that I am single again, I look at it as an opportunity to pay off the house after my student loan.

One more thing that still sticks in my head….. my last GF after telling her how much I made a month and how much I put into retirement was in shock and thought I was crazy since I can’t take it with me and I can die in 5 yrs. I agreed with her that I may die early, but in no way did it affect the things we did together. We still had fun though we did not live a lavish life style. We still travelled and ate out when we wanted. We still had the nice perks. My response to her was always, yeah I can die in 5, 10, 15 and 20 yrs, but what if I don’t? Who will take care of me. I don’t want to be in the system? We’re not together now… not for that reason, but I wish if she does live long that she has found someone to be with because she certainly did not plan to have any money saved up.

The future is still not certain, but I have a little breathing room and looking back, I don’t think I missed out on much if any by setting aside money once I decided to do it. 🙂

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Nonya

Kristin, I’m so motivated by your accomplishment. I’m currently in nursing school and was so proud that my small personal loan would last me the length of the program because I choose to live at home and commute. However I had to move, and although the space is good for my sanity I can’t top thinking about the extra $80month in rent + utilities. Apparently when I graduate I’ll be making big bucks as nurse but all I can think about is the personal loan+ credit card debt+ gvt loan that will be about $65k around graduation. thank you for sharing your story because I am tired of listening to some people say that they deserve to buy an experience item for their accomplishments when they are in debt up the whazoo

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Edward

I’ve said it before and I’ll say it again–you’re a damn smart girl, Kristin! One of the good ones! 🙂

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Elmwood

This is so encouraging!! When my husband graduates in December, we will be in full-on debt attack mode. We won’t have the same options you did (moving in with parents) but it’s inspiring nonetheless. Well done!

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Tzctgetr

Just want to point out you didn’t pay your debt, your parents did by subsidizing your housing.

Anybody that can double his salary and get free housing surely will be able to pay most debts in a shorter period of time.

In other words, good for you, but I don’t think this will be of much use to other people.

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Shauna W

I agree tenfold. Good for you, but this will not work for many, dare I say most, people. Most people cannot just move back in with mommy and daddy and live rent-free. I am not sure what other bills you had to contend with, but cutting out rent, utilities, and I am guessing food(?) would certainly make things much easier. For most folks, this is a dream, not a reality. But still, good for you.

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Alycia

I’m slightly older than you, and have seriously considering moving in with the parents to get things on track with my finances. I don’t know how I’d like the doubled commute and lack of privacy though.

I think the discipline of truly living within my means on my own would be a skill that I’ll reap the rewards from for a lifetime. I’m just starting to get my act together though.

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Nightvid Cole

Why? Your doubled commute is going to negate much of your savings anyway once you realize that wear and tear on a car are actually more expensive than gas!

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Forrest

When you are young it is the time to travel, I am very frugal but to “sacrifice a year” of your life is not ever worth it. Money is something that should allow you to live as you please, not inhibit you from living.

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Nightvid Cole

Whether or not avoiding travel in your 20s to save money is worth it or not is subjective.

I personally think it is a mistake to think you can’t enjoy yourself in less expensive ways. Humans have been around for 200,000 years in modern form and enjoyed life just fine without travel for at least 199,000 of those years.

I’d much rather enjoy myself by hanging out with friends and taking a walk than to see $2000 go up in a puff of smoke in a single week just to go somewhere else and then come back.

To each his/her own, I guess…

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Darren Wolbers

While people here cheer her on for being determined to sacrifice in the short term, something they fail to see is the fact that she moved back home !! How many of us could be out of debt so much faster if we had someone else paying our rent/mortgage, groceries and utilities? Give me an extra $600 a month and see how fast my debts disappear ! While I applaud her for giving things up in the short term to have long term financial freedom, I can’t help but wonder if she’d still be in debt if she had to provide and take care of herself all that time instead of relying on someone else.

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Marjorie

Meh. At the rate she was going, without moving to a better apartment when she got the new job, she’d have paid it off just fine. Moving back in “turbo-boosted” her effort but she was plugging away just fine.

In my household, we have a mortgage, and I’ve just started grad school, so it’s slower going, but I think the key is the lack of “lifestyle inflation.” She made a good choice by not taking on the debt of a house before the loans were paid off. Now used to paying $x00 a month on loans she can save $x00 and wait for the right next big thing to come along.

Each of us will have a different story/timeline, but the premise is the same. And those who have a clear focus on a well-defined goal WILL achieve it.
Rock on, Kristin!

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Kris L.

I wonder what parents think when they see the option to move back home on these kinds of pages. It’s not free for them. Maybe they are stuggling as well? The tone is always about how horrible the kid feels about moving home, but I don’t hear much from the parent’s side.

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Lisa

I agree. When I lived at home (for three years, working before going to college), I still had to pay rent AND follow their rules–it just was lower than market value. Even if my husband and I had been geographically able to live with either of our families, we would have contributed to the household.

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C

Nice job! After graduating in 2004, I also paid off my loans (about $16k) “early” (in 4 years, rather than 10). For most of that time, I was in grad school earning $20-30k/yr. The big things I did were:

1) Keep housing costs low. I cannot stress this one enough. Things like the occasional starbucks, a new pair of shoes, etc. are nothing compared to paying an extra $300 or more EVERY MONTH just to live in a nicer place or without roommates. Find the cheapest living set up that you can and then hang onto it. Roommates are not a dealbreaker. I have always been very strict about my limits on rent and amazingly, something always seems to work out if you just have the attitude that higher rent is not an option (as an example, I now live in one of the most expensive parts of the country–for under $700/month, about half of what many people pay. No crazy secret, just refused to consider anything more expensive and then made one of the options available work for me). For most of the time that I was paying rent off, I had 4 or more roommates and my rent (including utilities) averaged $300/month. Sometimes my roommates were obnoxious, but hey, a loan is pretty obnoxious too. Mostly my roommates were awesome people and I am still friends with several of them–can’t say that about a loan!

2) I started paying off as soon as I got a job (which, fortunately, was soon after graduation…though I was only earning $12/hour), rather than waiting for the 6 month grace period to end. This way I got used to seeing that money leave my paycheck every month and didn’t have to rein my spending in once the grace period was up.

3) Pay 2x the scheduled payment every month. I probably could have been more aggressive, but for me this was a good amount that allowed me to also save for other things and have occasional non-necessities. However, in my mind, that doubled number became the “minimum” I had to pay off every month, and I was ruthless about making sure my monthly budget would accommodate that minimum.

4) At least 50% of any one-time money went straight into loan repayment. When I started grad school, I was on a $15k/yr stipend and then I also got a one-time award of a couple thousand dollars. I put half of the one-time money, banked the rest, and then lived off the $15k (minus my doubled monthly payments, of course). If I got a tax refund, half of it went to the loan, and so on. Often I tried to do a little more than half, but a minimum of half was non-negotiable. For anyone trying to get out of debt, I would strongly recommend setting yourself a “minimum” that is at least a little bit more than the actual minimum quoted by your lender. Even $25/month adds up over time and can usually be carved out of your existing budget without too much pain.

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Lisa

I always find student loan articles interesting–partially because of our quest to pay off both my husband’s and my debt, partially because I am the Director of Financial Aid at a small school, and I am always seeking ideas to help students respond to their debt in a responsible way.

My husband and I started out with ~$180k of combined loans (after capitalized interest). All but ~$10k are private loans, with interest rates varying from 8% to 13%. This currently means about $15k in interest per year. After finishing grad school, my husband was unemployed for about 6 months, and we stretched our savings and my earnings–he providentially got a job right before we ran out. Moving in with either of our families was not an option due to the distance from my job (which paid more than I would have been able to get elsewhere). Our combined earnings are now around $80k/year before taxes in a very high cost of living area ($1200-1500/month is average for a 1br apt). After paying off a loan from a family member, we are now paying off the highest interest loan and being encouraged by our progress. After 2 years of payments, we are down to ~$146, and anticipate paying them off within 4.5-5 years. Because of the high interest rates, relative job security, and our ages (mid 20s), we are not keeping much in savings and are not saving for retirement (no matches to make it worth it right now); that will be something we work on after our debt is satisfied. I have a dream of living completely debt free (including mortgage, which we won’t have until after we pay off our student loans and save at least a down payment) by the time we are 40–all so that we have the freedom to give/work for charities, help out our families, and spend more time with our children (the shortest-term goal here is to enable me to be a SAHM).

We both were not used to luxury (but are not poor, either), and so many of our “live like students” habits have remained. We definitely “sacrifice” now compared to many of our friends, but I think it will pay off in the end. I just need to remember that 5 years isn’t forever…

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Lisa

I always find student loan articles interesting–partially because of our quest to pay off both my husband’s and my debt, partially because I am the Director of Financial Aid at a small school, and I am always seeking ideas to help students respond to their debt in a responsible way.

My husband and I started out with ~$180k of combined loans (after capitalized interest). All but ~$10k are private loans, with interest rates varying from 8% to 13%. After finishing grad school, my husband was unemployed for about 6 months, and we stretched our savings and my earnings–he providentially got a job right before we ran out. Moving in with either of our families was not an option due to the distance from my job (which paid more than I would have been able to get elsewhere). Our combined earnings are now around $80k/year before taxes in a very high cost of living area ($1200-1500/month is average for a 1br apt). After paying off a loan from a family member, we are now paying off the highest interest loan and being encouraged by our progress. After 2 years of payments, we are down to ~$146 (interest is about $15k a year in addition to the principal payoff), and anticipate paying them off within 4.5-5 years. Because of the high interest rates, relative job security, and our ages (mid 20s), we are not keeping much in savings and are not saving for retirement (no matches to make it worth it right now); that will be something we work on after our debt is satisfied. I have a dream of living completely debt free (including mortgage, which we won’t have until after we pay off our student loans and save at least a down payment) by the time we are 40–all so that we have the freedom to give/work for charities, help out our families, and spend more time with our children (the shortest-term goal here is to enable me to be a SAHM).

We both were not used to luxury (but are not poor, either), and so many of our “live like students” habits have remained. We definitely “sacrifice” now compared to many of our friends, but I think it will pay off in the end. I just need to remember that 5 years isn’t forever… 🙂

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@pfinMario

Having just finished a Master’s Degree, $12,000 per year would be the absolute minimum I could pay. I’ll probably do around $17,000 instead…

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Student Loans Worked Out

The fact that the author calls moving back to her parents’ house a “sacrifice” made me chuckle. Indeed, american kinds are overindulged. Isn’t it the parents who made the sacrifice, subsidizing rent and for their grown up child?

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Sam

Thanks for sharing your story, Kristin.
I really needed to read this. I’m 22 living at home trying to pay off my car and school. Sometimes I feel so lame for living at home. I basically want to pay for it all as soon as possible, so my future can be debt free. I am pretty young and I realize I would rather sacrifice a little independence now for my financial well being in the future. My parents love that I am at home, strangely enough. I guess that makes me lucky. I wish to move out sometimes, but every time I am at that breaking point, I sit down and remind myself of what I want. Short term, things might not be ideal, but in the long run, I believe staying at home a little longer will pay off.

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Kristin

Hey, hang in there, Sam! It probably feels like you’re too old to be living at home, but 22 is completely reasonable especially if you’re trying to free yourself from debt.

I agree with a few others that it shouldn’t be considered that big of a sacrifice but it certainly feels like it at the time. Actually, we’re pretty lucky to have our parents to help us save money on rent. Reading the stories from others, I’m sure they wished they had that option. You’re taking advantage of an opportunity more than you are making a sacrifice.

Someone suggested writing a story about boomerang kids–maybe you could submit your reader story if you haven’t already?

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jim

Kate,
WOW!
I think “moving to an active war zone” definitely counts as “BRUTAL”. Thank you for your service – glad everything worked out well for you and yours.

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Rosa

Our story is similar, but with one twist – my husband had a student loan of $40k, and because of some lost paperwork (on their side!) the lender thought he had defaulted (when he was still in the last year of his PhD), and demanded immediate payment in full. We had a house – in my name only, as he was still a student – and I took out a home equity line of credit at 3% interest. Then he graduated, & we both took on every extra bit of work we could, lived on next to nothing, and paid the whole thing off within a year. We made about $100,000 between the 2 of us that year, paid over $40k in taxes (in Canada), paid off the $40k loan, lived on the rest. It was not fun or easy – but it sure felt good to get rid of that dratted loan. Moving in with parents was not an option – my husband’s are dead, mine live about 1000 miles away, in an economically depressed town where we could never have found enough work, even if we wanted to live there. But leveraging the asset we had – a home that was rapidly increasing in value – helped us get out of debt quickly, except for the mortgage.

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The Insurance Guy

Great article Kristin! Very inspiring! I was in the same boat and decided to pay it all off in a year. Great job!

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Jamie

Great work, Kristin; very inspirational!

I’m one of the few who is intentionally paying off my student loan slowly. In fact, right now I have a mere $350 left and it won’t be paid off until October!

A big reason for this is my interest rate is 2.14%. Every month, I pay the minimum and it costs me $1 in interest. It is my only debt, and like you mentioned, I’m pretty sure my credit score would drop a little if I paid off the total now (That happened with my car loan last year. Such a bummer!).

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Do or Debt

Awesome job! I am working to pay off my remaining 55k in 4 years. It’s been hard and I am trying to cut back more and more and hustle. For me it’s about making more money and I can only cut back so much right now. I can’t wait to be debt free!

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John

Sounds just like my story.. (except for the curfew part)
I graduated from college with about twice as much debt as Kristin. I could easily afford to rent a place downtown and pay my loans for the next decade or two.
Instead, I moved back home and focused on saving up as much as possible to pay off my debt before the interest kicked in (1 year grace).
By the end of the first year I paid off all of my college loans.
Another year later I saved up enough for a down payment on my first home and moved out. Were there some sacrifices, yes absolutely. Totally worth it to go from over 20k in college debt to home ownership in two years? Absolutely..

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Kay

Thank you for writing this, I can relate as I often struggle with student loans. I want to be free of my student loans (~40k), but have a hard time finding the balance while saving for retirement at a young age (25). And moving in with the parents isn’t an option because my work is limited to urban areas. Paying off $40k would take about 3 years if I made minimum investments to retirements (~2400/yr in Roth IRA) or I can take longer paying off the student loans (maybe 6 years total) but invest the full $5500 into a Roth IRA a year. I always go back and forth on this on what to do. Does anyone have any suggestions?

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Laura

Just my $0.02 – I’d probably max out the retirement and pay less on student loans. I know at age 25, retirement seems 1,000,000 years away, but your older self will thank you for investing now. Plus it may change your tax bracket so you owe less tax, and I think someone said you can deduct student loan interest. I’d love to hear others’ thoughts.

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Kay

Thanks Laura! I appreciate you taking the time to comment! See, in theory I agree with you. I think that 1.) you can’t finance your retirement, and 2.) worst case scenario, you can always use the money in your ROTH to pay off your student loans. I understand that you shouldn’t do that, but saying it is a possibility. However, on the other hand, I also sort of follow the notion that personal finance is highly dependent on the individual, and sometimes the best thing to do is what makes you sleep better at night. In this case, seeing as how far retirement is, and seeing that right after my rent, my second biggest part of my budget is student loans, the comfort of having those paid off would be great. However, logically, I know that saving as much as I can for retirement now is a huge benefit in the future.

Of course other factors play into it like you said, such as the student loan deduction. But even if I was able to get the maximum benefit, It would save me about $300-400. Which is nice, but I’m not sure about the worth of that benefit. Also, since I am investing in the ROTH IRA, I don’t think it would lower my tax bracket since ROTH contributions are after tax I believe.

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jim

Kay,
I was a little older than you (28) when I found myself in much the same position as you are now. What’s the interest rate on your loans? If it’s under 6%, I’d definitely invest in your retirement. That’s what I did and I am sooooooooooo glad I did ’cause now I’m looking at retirement in about 10 years and if we hadn’t started saving when we did, we’d never be able to retire at 63-65 years old. We did our best to keep our life style down and pay those loans off as fast as we can, but it still took a long time. Don’t regret it ’cause now we’ve got our 401(k)’s and IRA’s funded.

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Kay

Thanks Jim!

About half are at 6.8% and the other half are at 5.75%. They are sort of at that borderline of what’s best to do. And my Roth IRA is vested in a index fund thats’ 98% in equities. In terms of my loans, some are unsubsidized, while others are subsidized. Since I haven’t knocked further education out of the question, I’ve been trying to be aggressive about paying down the unsubsidized loan.

I guess I just worry that until my student loans are paid off, I won’t be able to save for a house, a savings account for a car, etc.. But I suppose such is life and hopefully in time my income rises with experience (or further education) and all these goals can fall into place.

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jim

Kay,
Even with our student loans (that were at 8 and 9.7 % – back in the day) we were able to buy a house, raise 2 kids and have a whole lot of fun in the process. Of course you want those loans dead and gone – but life happens quickly. Don’t let those loans hold you back. Get them paid off as fast as you can, but go for what you want in the meantime. Best of luck!

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gj

“I’d pay a huge chunk of my loan, and instead of applying it to the principal, they’d apply it to future interest…”

How is this even freakin’ *legal*?

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Adriana

***That’s why you have to read the fine print***

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Kate

I love this line: ” I didn’t want to sacrifice a little for 10 years or even five years. I wanted to sacrifice a lot for one year.”

I feel exactly the same way, and I don’t think I’ve ever heard it epoused on any other PF site to date.

In our case, I really went for it: I moved to an active war zone for a year (leaving my husband in charge at home) and banked all my danger pay. I paid off my student loans and paid for our wedding in cash.

I won’t say it wasn’t a *brutal* sacrifice but at least it was over (relatively) quickly and we could start fresh.

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SLCCOM

Thank you (and your hubby) for your service!

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Sam

That’s the way to do it, in my opinion. Focus and kill the debt! We paid off $55,500 in unsecured debt (Mr. Sam’s MBA student loan debt was more than half of it) in just over a year.

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Emma | iHELP students loans

Kristin, your story is inspiring and shows hard work and discipline. I especially like your emphasis on avoiding lifestyle inflation.

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Dona Collins

You have great, fair parents who knew that allowing you to pay off your student loan debt would be important to your financial freedom moving forward. Inspiring story!

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Beth

I hope I can do the same for my children when they are out of college. Both my parents and my husbands’ parents let us return home after college. We both paid a token amount of rent and helped out around the house, but it was worth it to kick our debt to the curb.

I feel sorry for people who don’t have that kind of support network. Being able to live at home all those years ago is still helping me today.

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JB

I’m fairly certain this entire story could have been explained in one sentence: I paid off my $12K loan by moving in with my parents and paying as much as I could for a year.

Maybe it’s just me, but I expect more from a staff writer (as opposed to a reader story, which is what the above article really is).

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Kristin

I appreciate the constructive criticism, JB.

I’m not going to bother defending my topic choice or decision to tell my story; if you didn’t get anything out of it, you didn’t get anything out of it. Sorry to disappoint.

But I do take constructive comments like yours into consideration next time I write. So thanks!

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LeRainDrop

To counterbalance, this story really resonated with me — I loved it!

My debts were from law school, and while I certainly could have cut deeper to make faster progress, I still took a fairly aggressive approach to paying down what was more than $100k of debt (I think around $120k). For example, my first working year, I rented a two-bedroom condo with a friend; my next year-and-a-half, I rented a three-bedroom townhouse with the same friend and another friend; I continued driving my 1999 Mercury Cougar through most of 2012 (first five years of law practice, and a few months after completely paying off ALL of my student loans), despite some good ribbing from colleagues whenever I drove us to lunch, etc.; and I consistently threw nearly all the money I had left after paying bills (and retirement and emergency fund) towards my loans. I bought my current car in 2012 only because the old one had a number of ridiculously expensive repairs in the last couple years; I consciously toughed it out through certain rounds of repairs to get out of debt before considering a new car.

Granted, in the four years, eight months time it took me to pay it all off, I also had a couple nice vacations, bought my own condo, and loaned more money than I was truly comfortable with to family members who were in unique circumstances. I’m very grateful my salary afforded me that flexibility, but still it’s not as easy as many people would assume it is for attorneys, especially during economic times when many legal jobs were seriously in jeopardy and even lost (easier, yes, but easy, no).

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jim

LeRainDrop,
I LOVE your story – congrats! That is just awesome. And, like you, I LOVE Kristin’s story. It resonated with me too – but from the other side of the fence. Our son moved home after undergrad to work/save $ for law school. I know it killed him to do it (even tho I happen to think we’re the easiest going parents any adult child could dream of having to move back in with – ha!)

Both spouse and I know WE could never have moved back home with our parents after college – they were WAY too strict and we would have lost our minds. Since we took care of all of our son’s needs (and some wants)he was able to really study for that lsat (and he rocked it) and also had time to apply for lots of scholarships, all while working some really grunt jobs – think pizza delivery/warehouse etc, it has paid off for him in spades. He got a full ride scholarship to law school at a pretty decent school and has been saving all his earnings to at least put a little dent in living expenses. I’m sure he’s excited as hell to get out of our house and back on his own, but this past year is really going to put him in a much better position than he otherwise would have been.

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LeRainDrop

jim, mutual admiration! Your and your son’s story is fantastic! You must be very proud of him 🙂

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Amber Robinson

Hey there Kristin!

I have about 12k in student loans right now and my fiance’ has a 13k car loan. The moment we write are last check for the wedding (which is in July). We are going to be doing the same thing that you did. We are living off of his salary and my salary will be going (90% of it, gotta eat) to paying off those two tasks. Hopefully it will be done with in a year. Maybe we could go a step further afterward and put my whole entire salary away for a house. Either way. I loved your story and we hope to have one of our own. Very soon.
Cheers!

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RP

Kristin, thanks for the post. As a recent college grad currently paying off student loans I got a lot from this article and think it was well written!

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Nick @ ayoungpro.com

Awesome job and awesome story! I think everyone can and should get out of student loan debt ASAP when they graduate. Avoiding lifestyle inflation is key!

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Melanie

At this point, I’d rather throw my pennies at my emergency fund (family of three with problems popping up every moment we get… from sickness to car troubles, we’ve seen it all!) or at my car payment.

I’ve made this choice due to the fact that my student loan interest is at least a tax write off whereas my car loan or credit card interest is not.

Sadly, moving back in with family is not really an option as a parent and it’s much harder to cut back your budget when it’s already cut back so much.

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Ramblin\’ Ma\’am

My mother and stepfather didn’t allow us to move home after college. However, they helped pay my student loans. When I first graduated and was working in retail, they paid the majority. Once I was earning a better-paying, but still pretty modest income, they helped with about a quarter of the monthly payment.

My student loans were fairly small, around $15K. At the time, having those loans really didn’t bother me. I guess it seemed “normal,” and so many people had larger debts that mine didn’t alarm me. But now that I no longer have them, I really don’t want to go into debt again (except for a mortgage).

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Jane

That’s great that they helped you out like that. I’m thinking of doing a similar thing with my boys some day, if I think they are responsible and just need a little time to get their bearings post-graduation.

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PawPrint53

We’re downsizing to a small two-bedroom just so we can avoid this situation. We’re parents. 🙂

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Carla

Multiple people have lived in much smaller places out of dire need. 😀

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Tony@WeOnlyDoThisOnce

Great story, with great points that we can all learn from. Thanks for this!

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Kurt @ Money Counselor

Wow, moving back in with your parents–that does show commitment! You’ve proven that when it comes to paying off debt, where there’s a will, there’s a way. Congratulations!

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phoenix1920

There are parts of this story that seem confusing. At the beginning, the author states she was paying of $12,000, when she was making only $10 an hour and living at her parents but dreaming of moving out. Later, she states that she was salaried with a real job making more money than she ever had, and then took a job that paid twice as much and decided to move back home to pay off the loan even faster. When you’re salaried, you’re not paid by the hour. But if it was an hourly job, and if the second job was twice as much as the first, how is a $5/hr job a job making more money than one ever has?

Regardless, congrats on paying off the loans and for sharing your story!

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Kristin

Why ya bustin’ my balls, Phoenix? 🙂

Sorry–let me clarify. When I first graduated and realized I had looming debt, I was still working at my college job (where I was being paid 10/hour) for six months. When the student loans kicked in, I got my very first salaried job. A year after that, I got a job that paid double the salaried job. Hope this makes sense!

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Teinegurl

Hey Kristin- I would love if you did an article about “boomerang kids”

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Kristin

Why ya bustin’ my balls, Phoenix? 🙂

Sorry–let me clarify. When I first graduated and realized I had looming debt, I was still working at my college job (where I was being paid 10/hour) for six months. When the student loans kicked in, I got my very first salaried job. A year after that, I got a job that paid double the salaried job.

Hope this makes sense!

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regor

I don’t get it. Let’s say you have a 100k in student loans and by magic you are given 100k to pay that loan. Would you pay it off at the expense of “freedom.” Or, would you invest that 100k and get a return higher than the interest you pay on loans and at the same time have the cash in case of an emergency. I think the low rate of a student loan makes things a bit flexible but pouring everything into paying a loan seems to me bad business advise. Thoughts?

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Ed

This is a great inspiration for all of the graduates, including my daughters. I’ve been trying to stress the same thing, which is to get those loans paid off before you spend money on “frivolous” things.

I keep sending them the links to the good pieces like this one. I’m hoping that they’ll start to become daily readers.

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The Norwegian Girl

you really made an effort! It´s so inspiring reading articles like this, since I`m currently a student, and I want to be prepared for the day I get the first bill in the post!

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Tonya

That’s a fantastic accomplishment–and one that is far from reachable for most of us. My $12k in student loans aren’t going anywhere fast as a single mother of three kids teaching at a public school. I will have the smaller of the loans paid off this year before I lose half my child support (when my 2nd child graduates), but the rest will take a back seat to paying the necessities after that. If I knew I could do it in one year of tremendous sacrifice, I’d totally do it.

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DreamChaser57

Stop making excuses and do what you can. As an educator, you can appreciate that critical thinking is a life skill. You are not Kristin. Examine your life closely and figure out how to make progress within the confines of your reality. As a mother, if the birthdays of your children fall within the same season do joint birthday parties. Refuse trinkets as gifts and invite family/friends to contribute to college funds. Consider thrift shops for clothes in upper class neighborhoods where quality clothing is frequently abandoned. Can you reduce your living expenses drastically? Buy workbooks and cut cable. You do yourself a grave disservice when you congratulate someone else and dismiss the instructive lesson for your own life. Best of luck & wisdom!

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Lincoln

I think it’s great that Kristin paid off her loans, but moving in with parents is not that big of a sacrifice. If you aren’t getting charged rent and you are increasing your cash flow by $700 per month, that basically means you are getting paid $8,400/year to live with your parents. I’m not saying that having your own freedom and lifestyle are irrelevant, but at 24 you can still mostly do that and live with family at the same time.

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Laura

In general, yeah, but I think moving in with *Kristin’s* parents could be a big sacrifice. 🙂 At age 24, the idea of me having a curfew and having to report to parents and live under their thumb would have been torture. That would have been a bigger incentive than the debt itself! (And yes, I know they love her. But it doesn’t change the fact that when you’re responsible, the last thing you want is to be treated like you’re not.)

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PB

One of my children keeps bouncing home for a half year or so and then is off on a new adventure. Fortunately, we have an apartment in the basement which is not entirely legal, so she uses that and we manage to stay out of each other’s hair, pretty much. Except for her (bad word, bad word, bad word) dogs.

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Kristin

You don’t know my parents….lol.

Just kidding, they’re great. And yeah, looking back, it shouldn’t have felt like the big sacrifice it did at the time. But I had a very strict childhood, so when I was 24 and had social freedom and the money to enjoy it, the last thing I wanted to do was go back home and live under my parents’ strict rules.

But looking back, I wish I would’ve taken the time to enjoy spending that time with them more.

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Carla

I do understand what you’re saying, Lincoln, but not everyone has a tight knit and agreeable relationship with their parents.

At 24 I was almost divorced and the thought of moving in with my mother to live under her strict religious rules would have been more than I could bear. Honestly she wouldn’t have me there because I don’t share her beliefs (their rules not hers). I love her dearly but we are like oil and water. Unfortunately its a relationship deal breaker for her because of her religion.

A curfew would have been a-OK with me!

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Babyb

I’m trying to crawl out of about 60k, with VERY little income. Chipping away right now is the best we’re able to do, but I have faith that our incomes will rise, and in addition to my job, I take on every freelance project I can. Thank God they’re not private though.

Random unrelated:
I like to read the blog comments here, and sometimes I do so from iPhone, but even when I view the fill site, I’m unable to read the comments. Is anyone else able to do this, if so, how?

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Jane

“Paying off student loan debt early isn’t for everyone.”

Why not? I’m wondering the reasons why this wouldn’t be the case, other than an extremely low income.

I agree that unsubsidized loans are a beast. I had one my last year of college, and within a few years it had accrued tons of interest – I think over 25% of the value of the loan. I have no idea how that happened, but because of that, I paid it off while I was in grad school and living off $17,000 a year. And we paid off the rest ASAP as well. It was such a freeing feeling to get rid of them. I’ve never had substantial credit card debt, so this was my first glimpse of how gratifying paying off debt could be.

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Elizabeth

I guess it depends on what you mean by early? I paid off my loan in less than five years (instead of 12) but I didn’t do it sooner than that because I wanted to save for retirement and I needed build an emergency fund. Oh, and I needed a place to live that wasn’t my parents’ and or student housing.

I really hate debt, but not keeping up with the savings habit I had been raised with was also a debt in my mind. If I had needed to fall back on an emergency fund, I likely would have been looking at credit card debt – which was far worse than the 3% debt I was carrying.

I can’t say what other people do, just that this plan worked for me. Kristen’s story is fantastic though!

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phoenix1920

For me, I’m not as worried about paying off my student loans early. I locked in with a really low rate and would prefer to pay off my house. Not to mention, not worrying about trying to pay off my student loans extra early meant that I could focus on paying for my children’s college tuition, although they are only 9 and 7. It was really important that I got their college tuition rates locked in through a college prepaid plan before the rates went crazy. Since that time, the college prepaid plans in Florida have skyrocketed.

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Kristin

Hi, Jane! There are a few reasons that I read about:
1)Some loans may have penalties for paying off early. I don’t know, mine didn’t.
2)Some people would rather use the money to invest and try to get a greater return than what the student loan interest is. I don’t know a lot about that, but I knew enough to realize this wasn’t possible for me, as my interest was 8% and my student loan was private. Oh, and the interest was variable.
3)Some say it hurts your credit score, though I’ve also read that this is a myth. It certainly didn’t affect mine.
4) Funding other financial goals.

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Barbara

I’ve paid off my mortgage, but not my student loans. I still owe a little over $10k. I could pay them off, but my interest rate is .625%, so I think there are better uses for my money, where I get a return that more than offsets the interest I am paying.

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Sara

I paid off my student loans 3 years early (7 years instead of 10). I always paid extra, but I wasn’t gung-ho about getting rid of them. I did decide I wanted them gone before we bought a house, so I paid most of it in the year and a half before we bought our house. Well, turns out we came up a little short in cash and we borrowed $5K from a 401K. Had we not paid off my student loans and instead hoarded more cash, I wouldn’t have had to do that. Sure, if you want to pull out the “you weren’t really ready to buy a house then” card, feel free to. I was too busy at the time focusing on the dual mantras of “debt elimination” and “save for retirement” without worrying about other financial goals, like buying a house.

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Mr. Bonner @ bonnersbillions

Well done paying that off so quickly! I’m not sure I would have wanted or chosen to move back in with my folks, but as you said that is definitely one way to turbo charge your savings, which will put you in a great place to transition to saving/investing for later in life much sooner thereby taking advantage if compounding earlier. Also, it’s frustrating hearing those shady companies applying your extra payments toward future interest. In what scenario would someone ever pay down future interest rather than principal???

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Phoebe@allyouneedisenough

Great job Kristin!! When I first graduated college I had no plans of paying off my debt early. The amount just seemed so large that there didn’t seem to be any point in trying.

So I went ahead paying the minimums, living an inflated lifestyle, and managed to rack up another $13,500 in cc debt. Finally I had had enough and I started attacking my debt.

When I got serious about it I was able to pay it all off (~$65K) in less than 2 years, and I’m so glad I did!

After I had paid off my debt I got engaged and moved across the country to live in the same state as my fiance. I too decided to live with my parents for a year, and it allowed me to pay for my wedding in cash, pay off my husband’s student loan debt, and save $20K for an emergency fund.

Sure, I gave up some freedom for that year, but now we have a networth of over $350K and more freedom than I ever thought possible! Sometimes a little short term pain is worth it!

Thanks for your inspiring story Kristin!!

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Samantha

I think your mindset is what its all about. I agree that debt is an emergency. Giving up the blind mentality that doesn’t really see what you owe, or what it means to future you, and instead only focusing on minimum payments, is very difficult. But SOO worth it, as you found out. I’m so tired of hearing friends complain about their debt and then in the next breath show me their new designer purse.

With that being said… I love that your story ended with a lavish vacation! There must be light at the end of the tunnel or you definitely lose motivation. You can only be ‘gazelle intense’ for so long.

My husband and I are working our way through $171,000 debt, including our mortgage. We are planning a wonderful vacation when its all gone! And I just know our sacrifices are going to be worth it.

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Beth

We are working on paying down our mortgage, and we plan to splash out on a nice vacation, too! To stay motivated, we keep pictures of our dream destination by our computers. It’s additional incentive to keep working, because the end is near.

There IS light at the end of the tunnel!

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nicoleandmaggie

That sounds a lot like my husband’s situation– 10K in unsubsidized private student loans at 8+% that we paid off in a year (even though we were only making 36K and our rent was 20K). They’d started out much smaller too, but the interest was turned on in college, so they gained $500-$800/year in principalized interest alone. (I was like, you bought so much junk with your summer earnings– why didn’t you pay down some of these loans? Turns out he didn’t know he had them.)

It really was worth it because high interest just drags you down. We had a lot more freedom after they were gone.

Go you!

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Tom

“(Note: I’ve read that paying off your loan early can have a negative impact on your credit report. For me, this wasn’t the case, but I thought it was worth mentioning.)”

Bah! I say eff that noise. I’ve paid off almost every loan I’ve ever taken out early (two cars and one student loan at ~30k) and recently got a credit score of 804. So I don’t believe that for one second.

In fact, credit scoring is anyone’s guess, so its sort of harmful to speculate. If you can pay off debt early, you should! Someone wrote a guess post here about how they don’t give a darn about their credit score because their debt free, I subscribe to that philosophy.

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Kristin

“I’ve paid off almost every loan I’ve ever taken out early (two cars and one student loan at ~30k) and recently got a credit score of 804. So I don’t believe that for one second.”

This is good to know. I hear so many possible myths of what may or may not affect one’s credit score.

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Nightvid Cole

I have no credit history and no credit score but I don’t care because I’m not going to borrow money.

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Anne Cross

Conceptualizing your debt as the whole amount you owe rather than the monthly payment is so important, and it’s what those lenders *don’t* want us to do. That’s why they always say “one low monthly payment of X” and so many of us (me, for sure) fall for it time and time again. Thinking about the whole amount is such an important lesson!

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Mark Battle

Anne,
Thank you for mentioning “Conceptualizing your debt as the whole amount you owe”. I know Kristin said it at the begining of the read, but it wasn’t until I read your reply that it suddenly “popped” out at me. I have been paying off two of our credit cards and hopefully will be out of those parasitic pieces of plastic by Jan-Feb of 2014. But my goal is to be finished with them before Dec of 2013. I can then “Conceptualize” the remaining 16K that is my wife’s school “Extortion” with new eyes. I am definitely shooting for Dec of 2014/Jan-Feb of 2015 of removing that parasite as well. Thank you Anne and thank you Kristin for giving inspiration to those of us in a similar “Titanic”. Wish me luck

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Pauline

well done Kristin. Moving back with the parents is one sacrifice I don’t think I would have been able to make, I was too independent.
But thankfully graduated with $0 debt and paid my way through college with multiple jobs and scholarships.
Some of my friends are still paying off college 10 years later and dearly regret going into debt for it. If you can work part time during college, go for it, your future self will thank you.

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Forrest

Unless you are in a position where you have most of your tuition paid for from scholarships or your parents working part time while in school will not allow you to graduate with $0 debt. Tuition and housing will run you nearly $20k annually, at what “part time” college job are you going to be able to make this plus have money for food and other expenses?

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M2cutie

I’d like to point out that school is $20,000 per year by your choice. I went to a school that was about that (when you included living costs) I had two small scholarships (~2k and 3k) I became an RA which earned me room, half off board and $250 per month. Plus I worked part time in an office on campus making $9.00 per hour. In the summer I worked full time at an internship plus babysat/dog sat when possible. in a year I pulled off about $15,000, remember I already got my room paid for in my RA stipend. So I was able to afford school that way. Senior year I worked a full time internship while being an RA and going to school. I had very little sleep but made $30,000ish, allowing me to graduate debt free and have some money to get an apartment, car, etc. to be able to move for my new full time job. I agree it’s not easy, and for many not possible. But i didn’t qualify for government loans (I’m the surprise baby and my folks were preping to retire during my 2nd year of school so their fiances didn’t help my FASFA paperwork.) The thing is you can’t do it until you try. You can’t handle a baby until uh no you have one, you can’t handle work and school until oh crap you have one. Put yourself out there before you decide what is or isn’t possible when you’re only 18 and going to college.

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Vanessa

It’s interesting that Kristin had a relatively small amount of debt but was determined to pay it off ASAP. Then there are other writers who have staggering amounts of debt, but don’t appear to be in any hurry to pay them off.

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Beth

I don’t condone that way of thinking, but I think I can understand it. For some people, getting out of debt might seem like an impossible dream, especially if what they owe is at least double what they’re currently making. They might feel like “Why bother? I’ll be in debt forever, anyway.”

I had a friend like this – she knew she’d have debt of over $100,000 by the time she graduated law school. So what’s another $5,000 in credit card debt? Again, I don’t agree with this way of thinking, but I can see how people get into that mentality.

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Kristin

I agree with Beth. That mind-set certainly isn’t for me, but I can understand the dilemma of being torn. I think it was easier for me because I was so young, and like I said, I only had more youth to look forward to after paying off my debt. That was a big motivation for me (being out of debt and still young), and I definitely took advantage of it–one of the few things I did right in my early 20s!

Good job! I do enjoy hearing stories about how people set goals and make them happen. I’m impressed by the sacrifices you made to eliminate debt.

I was the opposite. I could have paid off my student debt in a year, but didn’t because I wanted to build an emergency fund and start saving for retirement. (At the time, the interest on my loan was much lower than what my retirement investments would earn.) Moving home wasn’t an option because there were no jobs, but I continued to live in shared housing as long as I could. I lived very frugally so I could meet all these goals.

I do agree with the “your debt is an emergency” mantra widely touted in the PF community — some extent — but sometimes bending the the rules makes sense 🙂

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Sheryl

Balancing the savings/debt payments is a hard place to be in. My first year post-graduate I made highly accelerated payments on my student line of credit and paid off over $10,000 in debt in a year while only making small contributions to my savings funds.

Then my now-husband went back to school and we re-evaluated. My interest rate is low and I’d made a lot of headway on the principal but my savings were a little sad looking. So savings became the bigger priority for a long stretch but because of the principal I’d paid down at least less of each payment went towards interest.

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Mom of five

Good for you! It sounds like you were doing the right thing from the get go. I took a more winding route but somewhere around 26 my reason for living became to be worth nothing – no student loan or credit card debt. Everything extra at that point went towards the debt. I was done by the time I was 29. That’s when I met my husband and married close to 200k in debt!

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Marc

I’m curious, about your story because when I married my wife put together we had 150k worth of debt. Her’s are all student loans (graduate school) and unfortunately mine are mostly dumb stuff. I enjoyed the heck out of my 20’s but am paying for it in my 30’s.

I’m paying off things and using the snowball method and am about to watch two big portions of debt drop off to give us almost $500 a month more. But there’s still a tough road to hoe.

So I’m curious as to what steps if any you took. How did you keep yourself motivated? Did you have a house when all this happened? Did you have to give yourself some goals and once you achieved them you let loose a bit?

I wonder because like you paying this off in a year isn’t possible. For my wife and I this is at least a 5 year road. But I want to get it done and over with so any tips are appreciated.

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betsy22

Yeah, I’m going to be there too. I finally paid off my car loan, but my fiance still has a TON of law school loans (+ a car loan). urgh.

Like you, there’s no way that we could knock these down in a year, but both of us working together could probably get the loans wiped out within 3-4 years. The problem is that I’m in my late 30s, so if we want to have a kiddo, we’ll have to start very soon. If we’re succesful, that’s going to limit the amount of free income that we have to devote to the loan. Oh well – guess that we’ll do the best that we can.

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chase

I’m on the cusp of paying off my $35 000 student loan in exactly 3 years. The biggest helper I found was to set up an account on mint . com. You do have to put in some very sensitive info, but it is highly guarded and secure. Mint allows you to track your bills, manage debt, manage budgets and much more for free. As long as you do most of your finances through debit/credit and online you will see some very encouraging results quickly. It is a bit more work if you use cash (save your receipts). Did I mention this is completely free? Oh, and when I started using Mint 10 months ago I still had $27 000 left on my student loan, just to give you an idea of how useful tracking ones own finances can be.

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Holly@ClubThrifty

Great job, Kristin. I’m a lot like you….I would rather pay off debt the quick and painful way instead of the long and drawn out way =)

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